FORM 1120: EVERYTHING YOU NEED TO KNOW

Do I need to file a Form 1120 if the business had no income?

Most folks only think about the annual Form 1120 Tax return, but there’s actually a ton of taxes and tax deadlines for Delaware C-Corps.

And Yes, even bootstrapped pre-revenue startups must pay taxes. You might not be subject to Income Taxes (which are based on profitability) but you will still be subject to a wide variety of other taxes which aren’t always connected to Revenue.

To start, here are 4 Startup Tax Calendars, based on metro:

New York Startup Tax Calendar
Palo Alto Startup Tax Calendar
Santa Monica Startup Tax Calendar
San Francisco Startup Tax Calendar

Quick caveat though, these startup tax checklists aren’t complete. There are actually a bunch of taxes out there, some of which may or may not apply to you (depending on your unique circumstances, of course). Here’s a list of just some of the different types of taxes out there that you may need to consider:

Income Tax: this type of tax is what most people think of when they hear taxes. It’s taxes based on your Net Income, or profit.
Gross Receipts Tax: some cities, like San Francisco, will tax your Gross Revenue.
Franchise Tax: this type of tax is imposed on businesses who just…exist. Yes, for the pleasure of existing, you will be asked to pay a tax. There’s often a minimum fee, and most times it has nothing to do with whether you’ve generated income. The most common type of Franchise Tax for venture backed startups is DE Franchise Tax, which runs $400+ every year.
Payroll Tax: if you have employees, you have payroll tax. Be sure to use a payroll provider like Gusto to help you pay the right taxes at the right time, and file all the requisite forms (like the 941s).
Sales Tax: if you tangible goods (eg clothes, furniture, widgets, stuff you can hold in your hand), you’ll need to register, pay, and file sales tax. Use Avalara, because like payroll tax, it can get super crazy very quickly.
SaaS Tax: see more here.
Property Tax: if you have significant property holdings, whether that be land, or even just computers/tables/chairs, you might be subject to property taxes. This type of filing is frequently known as a “571-L.”
Foreign Tax: if you have a foreign subsidiary or parent company, you might be subject to withholding tax, or FBAR/5471/5472 reporting. Be sure to get this one right; the penalties for getting it wrong can be $10K+.

A very common misconception is that the CPA or firm that filed your annual tax return (the 1120) will have taken care of all these types of taxes: that is never the case!! It is always the CEO’s responsibility to make sure that these taxes are addressed and paid on time. Granted, a CEO can only know so much… and the CPA can only guess as to which types of taxes a company might be subject to. Hence, it’s really important to sit down with a CPA to make sure that all bases are covered based on your company’s unique situation.

How to get the Form 1120

You can find the official Form 1120 on the IRS’ website. Always go directly to the IRS’ site to get the form, as they tend to have minor changes from year to year. You can get the IRS Form 1120 by clicking here to visit the Internal Revenue Service’s page about Form 1120.

When is the 2023 Form 1120 filing date?

For most US corporations, April 15th is the due date for the Form 1120, the corporate income tax return. However, due to a Federal holiday, the IRS has moved the deadline to April 18th, 2023 and this can be extended until October 16th, 2023.

If a corporation wishes to extend its Form 1120 due date, it can request an extension of time to file. To obtain an extension, the corporation must file Form 7004, “Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns,” by the original due date of the return. The extension will generally allow the corporation to file its tax return up to six months after the original due date.

The Internal Revenue Service (IRS) is responsible for enforcing the federal income tax laws and for administering the tax system in the United States. The IRS is a bureau of the U.S. Department of the Treasury and is responsible for collecting taxes, enforcing the tax laws, and providing tax assistance to taxpayers.

Why does the Form 1120 due date change some years?

If the due date for filing a tax return falls on a Saturday, Sunday, or legal holiday, the due date is moved to the next business day. This means that if April 15 falls on a weekend or legal holiday, the due date for filing the tax return would be the next business day. Recently, a combination of Emancipation day, a holiday in Washington DC, where the IRS is headquartered, and the 15th falling on a weekend, have pushed out the Form 1120 due date.

Where to file Form 1120

Corporations wishing to file the Corporate Income Tax Form 1120 with the IRS by mail must use the correct mailing address for the IRS based on the corporation’s location, and in some instances, the corporation’s total assets at year end. Visit the IRS’ website here to find the correct mailing address.

What materials do you need to complete a Form 1120?

To file Form 1120, a startup founder will need several documents and financial statements related to their business. Here’s a good starting list of the materials you’ll need to have on hand to complete Form 1120:

IRS Employer Identification Number (EIN) letter: This is the letter you received from the IRS when you obtained your EIN. You’ll need to reference this number on your tax return.
Basic business information: This includes your company’s legal name, business address, and other contact information.
Shareholder SSN/address info: You’ll need to provide the Social Security numbers and addresses of all shareholders who own more than 5% of the company’s stock.
Existing tax communications: This includes any tax documents you’ve already received from the IRS or state tax agencies, such as tax payment vouchers or notices.
Prior year tax returns: You’ll need copies of your prior year federal and state tax returns, as they contain information that will be used to calculate your current year taxes.
Local tax returns: If your business is required to file local tax returns, such as city or county taxes, you’ll need to have copies of those returns as well.
Financial statements: This includes a full year balance sheet, profit and loss statement (also known as an income statement), and general ledger. These statements should accurately reflect your company’s financial position for the tax year.
Capitalization table: This document lists all the shareholders of your company, along with their ownership percentages and the type of shares they hold (e.g., common, preferred).

Getting these materials together will help you produce your tax return Form 1120 more quickly and efficiently. One good tip is that it makes sense to keep track of these materials as you create them during the year, so that there isn’t a rush in March trying to get everything pulled together!

Form 1120 Department of the Treasury Internal Revenue Service

U.S. Corporation Income Tax Return

For calendar year 2020 or tax year beginning _ _ _ _ _ _ _ _, 2020, ending _ _ _ _ _ _ _ _ , 20_ _

▶ Go to www.irs.gov/Form1120 for instructions and the latest information.

OMB No. 1545-0123

2020

A Check if:

1a Consolidated return (attach Form 851) . . ▢
b Life/nonlife consolidated return . . ▢
2 Personal holding co. (attach Sch. PH) . . ▢
3 Personal service corp. (see instructions) . . ▢
4 Schedule M-3 attached . . ▢

TYPE
OR
PRINT

Name

Number, street, and room or suite no. If a P.O. box, see instructions

City or town, state or province, country, and ZIP or foreign postal code

B Employer identification number

C Date incorporated

D Total assets (see instructions)

E Check if: (1)▢ Initial return (2)▢ Final return (3)▢ Name change (4)▢ Address change

Income

Gross receipts or sales

Returns and allowances

Balance. Subtract line 1b from line 1a

Cost of goods sold (attach Form 1125-A)

Gross profit. Subtract line 2 from line 1c

Dividends and inclusions (Schedule C, line 23)

Interest

Gross rents

Gross royalties

Capital gain net income (attach Schedule D (Form 1120))

Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797)

Other income (see instructions—attach statement)

Total income. Add lines 3 through 10▶

Deductions (See instructions for limitations on deductions.)

Compensation of officers (see instructions—attach Form 1125-E) ▶

Salaries and wages (less employment credits)

Repairs and maintenance

Bad debts

Rents

Taxes and licenses

Interest (see instructions)

Charitable contributions

Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562)

Depletion

Advertising

Pension, profit-sharing, etc., plans

Employee benefit programs

Reserved for future use

Other deductions (attach statement)

Total deductions. Add lines 12 through 26▶

Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11

29a

Net operating loss deduction (see instructions)

29a

29b

Special deductions (Schedule C, line 24)

29b

29c

Add lines 29a and 29b

29c

Tax, Refundable Credits,
and Payments

Taxable income. Subtract line 29c from line 28. See instructions

Total tax (Schedule J, Part I, line 11)

32 2020 net 965 tax liability paid (Schedule J, Part II, line 12)

Total payments, credits, and section 965 net tax liability (Schedule J, Part III, line 23)

34 Estimated tax penalty. See instructions. Check if Form 2220 is attached▶ ▢

Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed

Overpayment. If line 33 is larger than the total of lines 31, 32, and 34, enter amount overpaid

Enter amount from line 36 you want: Credited to 2021 estimated tax Refunded ▶

Sign
Here

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Signature of officer

Date

Title

May the IRS discuss this return with the preparer shown below? See instructions.
Yes ▢ No ▢

Paid
Preparer
Use Only

Print/Type preparer’s name

Preparer’s signature

Date

Check if self-employed ▢

PTIN

Firm’s name ▶

Firm’s EIN ▶

Firm’s address ▶

Phone no.

For Paperwork Reduction Act Notice, see separate instructions.

Cat. No. 11450Q

Form 1120 (2020)

Warning: This information is for informational purposes only and should not be used for official tax matters. Use the official Form 1120 and instructions, generally found at: https://www.irs.gov/forms-instructions. Rely on this information at your own risk. Visit https://www.irs.gov/forms-instructions for official IRS information. Consult with a tax professional.

Form 1120 (2020)

Page 2

Schedule C

Dividends, Inclusions, and Special Deductions (see instructions)

(a) Dividends and inclusions

(b) %

(c) Special deductions (a) × (b)

Dividends from less-than-20%-owned domestic corporations (other than debt-financed stock)

Dividends from 20%-or-more-owned domestic corporations (other than debt-financed stock)

Dividends on certain debt-financed stock of domestic and foreign corporations

See instructions

Dividends on certain preferred stock of less-than-20%-owned public utilities

23.3

Dividends on certain preferred stock of 20%-or-more-owned public utilities.

26.7

Dividends from less-than-20%-owned foreign corporations and certain FSCs

Dividends from 20%-or-more-owned foreign corporations and certain FSCs

Dividends from wholly owned foreign subsidiaries

100

Subtotal. Add lines 1 through 8. See instructions for limitations

See instructions

Dividends from domestic corporations received by a small business investment company operating under the Small Business Investment Act of 1958

100

Dividends from affiliated group members

100

Dividends from certain FSCs

100

Foreign-source portion of dividends received from a specified 10%-owned foreign corporation (excluding hybrid dividends) (see instructions)

100

Dividends from foreign corporations not included on line 3, 6, 7, 8, 11, 12, or 13 (including any hybrid dividends) .

Section 965(a) inclusion

See instructions

16a

Subpart F inclusions derived from the sale by a controlled foreign corporation (CFC) of the stock of a lower-tier foreign corporation treated as a dividend (attach Form(s) 5471) (see instructions)

100

Subpart F inclusions derived from hybrid dividends of tiered corporations (attach Form(s) 5471) (see instructions)

Other inclusions from CFCs under subpart F not included on line 15, 16a, 16b, or 17 (attach Form(s) 5471) (see instructions)

Global Intangible Low-Taxed Income (GILTI) (attach Form(s) 5471 and Form 8992)

Gross-up for foreign taxes deemed paid .

IC-DISC and former DISC dividends not included on line 1, 2, or 3

Other dividends

Deduction for dividends paid on certain preferred stock of public utilities . .

Section 250 deduction (attach Form 8993)

Total dividends and inclusions. Add column (a), lines 9 through 20. Enter here and on page 1, line 4

Total special deductions. Add column (c), lines 9 through 22. Enter here and on page 1, line 29b

Form 1120 (2020)

Form 1120 (2020)

Page 3

Schedule J

Tax Computation and Payment (see instructions)

Part I—Tax Computation

Check if the corporation is a member of a controlled group (attach Schedule O (Form 1120)). See instructions ▶ ▢

Income tax. See instructions

Base erosion minimum tax amount (attach Form 8991)

Add lines 2 and 3

Foreign tax credit (attach Form 1118)

FCredit from Form 8834 (see instructions)

General business credit (attach Form 3800)

Credit for prior year minimum tax (attach Form 8827)

Bond credits from Form 8912

Total credits. Add lines 5a through 5e

Subtract line 6 from line 4

Personal holding company tax (attach Schedule PH (Form 1120))

Recapture of investment credit (attach Form 4255)

Recapture of low-income housing credit (attach Form 8611)

Interest due under the look-back method—completed long-term contracts (attach Form 8697)

Interest due under the look-back method—income forecast method (attach Form 8866)

Alternative tax on qualifying shipping activities (attach Form 8902)

Interest/tax due under Section 453A(c) and/or Section 453(l)

Other (see instructions—attach statement)

Total. Add lines 9a through 9g

Total tax. . Add lines 7, 8, and 10. Enter here and on page 1, line 31

Part II—Section 965 Payments (see instructions)

2020 net 965 tax liability paid from Form 965-B, Part II, column (k), line 4. Enter here and on page 1, line 32

Part III—Payments, Refundable Credits, and Section 965 Net Tax Liability

2019 overpayment credited to 2020

2020 estimated tax payments

2020 refund applied for on Form 4466

Combine lines 13, 14, and 15

Tax deposited with Form 7004

Withholding (see instructions)

Total payments. Add lines 16, 17, and 18

Refundable credits from:

Form 2439

20a

Form 4136

20b

Reserved for future use

20c

Other (attach statement—see instructions)

20d

Total credits.Add lines 20a through 20d .

2020 net 965 tax liability from Form 965-B, Part I, column (d), line 4. See instructions

Total payments, credits, and section 965 net tax liability. Add lines 19, 21, and 22. Enter here and on page 1, line 33

Form 1120 (2020)

Form 1120 (2020)

Page 4

Schedule K

Other Information (see instructions)

Check accounting method: a ▢ Cash b ▢ Accural c ▢ Other (specify)

▶

Yes

See the instructions and enter the:

Business activity code no. ▶

Business activity ▶

Product or service ▶

Is the corporation a subsidiary in an affiliated group or a parent–subsidiary controlled group?

If “Yes,” enter name and EIN of the parent corporation ▶

At the end of the tax year:

Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or tax-exempt organization own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the corporation’s stock entitled to vote? If “Yes,” complete Part I of Schedule G (Form 1120) (attach Schedule G) .

At the end of the tax year, did the corporation:

Own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of stock entitled to vote of any foreign or domestic corporation not included on Form 851, Affiliations Schedule? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (iv) below.

(i) Name of Corporation

(ii) Employer Identification Number (if any)

(iii) Country of Incorporation

(iv) Percentage Owned in Voting Stock

Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (iv) below.

(i) Name of Entity

(ii) Employer Identification Number (if any)

(iii) Country of Organization

(iv) Maximum Percentage Owned in Profit, Loss, or Capital

During this tax year, did the corporation pay dividends (other than stock dividends and distributions in exchange for stock) in excess of the corporation’s current and accumulated earnings and profits? See sections 301 and 316

If “Yes,” file Form 5452, Corporate Report of Nondividend Distributions. See the instructions for Form 5452.

If this is a consolidated return, answer here for the parent corporation and on Form 851 for each subsidiary.

At any time during the tax year, did one foreign person own, directly or indirectly, at least 25% of the total voting power of all classes of the corporation’s stock entitled to vote or at least 25% of the total value of all classes of the corporation’s stock?

For rules of attribution, see section 318. If “Yes,” enter:

(a) Percentage owned ▶ _ _ _ _ _ _ _ and (b) Owner’s country ▶ _ _ _ _ _ _ _ _ _ _ _

(c) The corporation may have to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign

Corporation Engaged in a U.S. Trade or Business. Enter the number of Forms 5472 attached ▶ _ _ _ _ _ _ _ _ _ _ _

Check this box if the corporation issued publicly offered debt instruments with original issue discount ▶

If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments

Enter the amount of tax-exempt interest received or accrued during the tax year ▶ $

Enter the number of shareholders at the end of the tax year (if 100 or fewer) ▶

If the corporation has an NOL for the tax year and is electing to forego the carryback period, check here (see instructions) ▶

If the corporation is filing a consolidated return, the statement required by Regulations section 1.1502-21(b)(3) must be attached or the election will not be valid.

Enter the available NOL carryover from prior tax years (do not reduce it by any deduction reported on page 1, line 29a.)

Form 1120 (2020)

Form 1120 (2020)

Page 5

Schedule K

Other Information (continued from page 4)

3 Are the corporation’s total receipts (page 1, line 1a, plus lines 4 through 10) for the tax year and its total assets at the end of the tax year less than $250,000?

Yes

If “Yes,” the corporation is not required to complete Schedules L, M-1, and M-2. Instead, enter the total amount of cash distributions and the book value of property distributions (other than cash) made during the tax year ▶ $

Did the corporation make any payments in 2020 that would require it to file Form(s) 1099?

15a

Is the corporation required to file Schedule UTP (Form 1120), Uncertain Tax Position Statement? See instructions . . . . If “Yes,” complete and attach Schedule UTP.

If “Yes,” did or will the corporation file required Form(s) 1099?

During this tax year, did the corporation have an 80%-or-more change in ownership, including a change due to redemption of its own stock?

During or subsequent to this tax year, but before the filing of this return, did the corporation dispose of more than 65% (by value) of its assets in a taxable, non-taxable, or tax deferred transaction?

Did the corporation receive assets in a section 351 transfer in which any of the transferred assets had a fair market basis or fair market value of more than $1 million?

During the corporation’s tax year, did the corporation make any payments that would require it to file Forms 1042 and 1042-S under chapter 3 (sections 1441 through 1464) or chapter 4 (sections 1471 through 1474) of the Code?

Is the corporation operating on a cooperative basis?.

During the tax year, did the corporation pay or accrue any interest or royalty for which the deduction is not allowed under section 267A? See instructions

If “Yes,” enter the total amount of the disallowed deductions ▶ $

Does the corporation have gross receipts of at least $500 million in any of the 3 preceding tax years? (See sections 59A(e)(2) and (3))

If “Yes,” complete and attach Form 8991.

Did the corporation have an election under section 163(j) for any real property trade or business or any farming business in effect during the tax year? See instructions

Does the corporation satisfy one or more of the following? See instructions

The corporation owns a pass-through entity with current, or prior year carryover, excess business interest expense.

The corporation’s aggregate average annual gross receipts (determined under section 448(c)) for the 3 tax years preceding the current tax year are more than $26 million and the corporation has business interest expense

The corporation is a tax shelter and the corporation has business interest expense.

If “Yes,” complete and attach Form 8990.

Is the corporation attaching Form 8996 to certify as a Qualified Opportunity Fund?

If “Yes,” enter amount from Form 8996, line 15

Since December 22, 2017, did a foreign corporation directly or indirectly acquire substantially all of the properties held directly or indirectly by the corporation, and was the ownership percentage (by vote or value) for purposes of section 7874 greater than 50% (for example, the shareholders held more than 50% of the stock of the foreign corporation)? If “Yes,” list the ownership percentage by vote and by value. See instructions

Percentage: By Vote _ _ _ _ _ _ _ _ _ _ By Vote _ _ _ _ _ _ _ _ _ _

Form 1120 (2020)

Form 1120 (2020)

Page 6

Schedule L

Balance Sheets per Books

Beginning of tax year

End of tax year

Assets

(a)

(b)

(c)

(d)

Cash

Trade notes and accounts receivable

Less allowance for bad debts

Inventories

U.S. government obligations

Tax-exempt securities (see instructions)

Other current assets (attach statement)

Loans to shareholders

Mortgage and real estate loans

Other investments (attach statement)

10a

Buildings and other depreciable assets

Less accumulated depreciation

11a

Depletable assets

Less accumulated depletion

Land (net of any amortization)

13a

Intangible assets (amortizable only)

Less accumulated amortization

Other assets (attach statement)

Total assets

Liabilities and Shareholders’ Equity

Accounts payable

Mortgages, notes, bonds payable in less than 1 year

Other current liabilities (attach statement)

Loans from shareholders

Mortgages, notes, bonds payable in 1 year or more

Other liabilities (attach statement)

Capital stock: a Preferred stock

Capital stock: b Common stock

Additional paid-in capital

Retained earnings—Appropriated (attach statement)

Retained earnings—Unappropriated

Adjustments to shareholders’ equity (attach statement)

Less cost of treasury stock

Total liabilities and shareholders’ equity

Schedule M-1

Reconciliation of Income (Loss) per Books With Income per Return
Note: The corporation may be required to file Schedule M-3. See instructions.

Net income (loss) per books

Federal income tax per books

Excess of capital losses over capital gains

Income subject to tax not recorded on books this year (itemize)

Expenses recorded on books this year not deducted on this return (itemize):

Depreciation

Charitable contributions . $

Travel and entertainment

Add lines 1 through 5

Income recorded on books this year not included on this return (itemize):

Tax-exempt interest $

Deductions on this return not charged against book income this year (itemize):

Depreciation

Charitable contributions . $

9 Add lines 7 and 8

Income (page 1, line 28)—line 6 less line 9

Schedule M-2

Analysis of Unappropriated Retained Earnings per Books (Schedule L, Line 25)

Balance at beginning of year

Net income (loss) per books

Other increases (itemize):

Add lines 1, 2, and 3

Distributions: a Cash .

b Stock

c Property

Other decreases (itemize):

Add lines 5 and 6

Balance at end of year (line 4 less line 7)

Form 1120 (2020)